Ontario’s FSCO Five-Year-Review Report and Recommendations for Auto Insurance

April, 2009 – The Ontario Insurance Act as amended in 2003 includes a requirement that the Superintendent of Financial Services undertake a review of Part VI of the Act and any Regulations – Part VI of the Act and the Regulations includes statutory accident benefits, court proceedings and dispute resolution – at least once every five years. The Superintendent is to report back with recommendations to improve the effectiveness and administration of Part VI and the Regulations.

The Financial Services Commission of Ontario (FSCO) embarked on a stakeholder consultation process in the second half of 2008 to support the auto insurance review process. In addition, FSCO regularly hears from stakeholders on numerous issues. The opinions expressed by stakeholders represent a broad range of experiences and perspectives. Many of the recommendations in this report reflect the comments received through the consultation process.

In the past few years, profitability has not been an issue for the P&C insurance sector in Canada or Ontario. However, financial results for the P&C industry declined in 2008. Following the 2003 auto insurance reforms, loss costs fell in 2004. Loss costs have been rising since then and have resulted in an upward swing of rate changes approved by FSCO in 2008. However, rate increases have not kept pace with rising loss costs and the insurance sector reports significant rate inadequacy in the system. Declining profitability, significantly lower earnings and loss cost increases will accelerate in 2009 in the absence of structural changes to stabilize costs.


Virtually every stakeholder commented on the complexity of the existing accident benefit system and the level of regulatory burden created by the Statutory Accident Benefits Schedule (SABS). Ironically, many stakeholders proposed additional procedures to address non-compliance and abuses in the system which would invariably add more complexity to the system.

The report (72 pages) with 39 recommendations is available on the FSCO website at http://www.fsco.gov.on.ca/english/insurance/auto/5yr-review/5yrRevReport09.pdf